Buy Now, Pay Later purchases could soon alter Brits’ credit scores, under plans by London fintech Zilch, in a sign of the growing impact the deferred payments schemes have on consumer spending behaviour.
The firm, which was valued at $2 billion in a funding round last year, is set to begin sharing customer data with credit references agencies, according to the Telegraph, as part of a change in policy which could determine their eligibility for credit issued by other lenders.
It comes after Zilch partnered with credit agency Experian last year – a move which allowed it to carry out credit checks on customers without impacting their credit score.
Zilch co-founder and CEO Philip Belamant told the Telegraph: “For the first time in the UK, customers can now build their credit scores without relying on revolving high interest rate bearing products.
He added: “Zilch has always done a full affordability check when customers sign up. We have taken it a step further on the affordability side.
“We hope by the middle of next year we will see regulation move in on this space.”
The announcement comes amid concerns raised by MPs over the possibility that Buy Now, Pay Later products lure consumers into spending more money online than they can afford.
However, Belamant has argued that BNPL payments are a better option for customers short of cash, slamming the “unacceptable and fundamentally misaligned” fees and interest charged by credit card companies.
He told the Standard: “With the cost of living going up, and with people paying billions of dollars in fees and interest, we think it’s the perfect time…[for] a product like ours which eliminates those costs for customers but provides the same benefits.”
